A federal judge rejected a proposed $79 million class-action
settlement between American Express Co. and a group of merchants,
citing a recent discovery that two opposing lawyers in the case had
exchanged confidential documents.
In a 44-page decision released Tuesday morning, U.S. District
Judge Nicholas Garaufis also removed from the case Gary Friedman, a
lawyer who had represented some of the merchants. Mr. Friedman had
exchanged documents with rival lawyer Keila Ravelo, who was
representing MasterCard Inc. in a case that involved many of the
same merchants.
The court "concludes that the improper and disappointing conduct
of Co-Lead Class Counsel Gary B. Friedman has fatally tainted the
settlement process," wrote Judge Garaufis.
The judge's ruling was unusual because he had granted
preliminary approval to the pact last year.
AmEx said in a statement that it was "disappointed" with the
judge's decision and "we continue to believe the agreement was fair
to merchants, and would provide them with additional flexibility
while ensuring our card members are treated fairly at the point of
sale."
The company also said it would continue to fight the case in
court.
A lawyer representing Mr. Friedman couldn't immediately be
reached for comment.
Write to Robin Sidel at robin.sidel@wsj.com
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